Tax sops for pledging gold, higher import duties, demands RBI
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Referring to the macro issues related with gold, the report said the demand for gold in India is not strictly amenable to policy changes and also is price inelastic due to various reasons.
"Banks' role in canalising gold imports is important, but has been declining over the years. There is scope for reviewing the current incentives available for banks to deal with gold imports," it said, adding it is critical to ensure real returns to investors through various financial savings products, so that attention can be diverted away from gold.
Other recommendations include, limits on the volume and value of gold to be imported by banks; imposing export obligation on bulk gold importers; and need to thoroughly review the operational practices followed by gold loans NBFCs.
It further suggested that "banks may expand their gold jewellery loan portfolio to monetise the stocks of idle gold. The debate on setting up of a gold bank may be revisited".
Also, banks may continue retailing of gold coins and they may continue their role as nominated agencies in gold imports, RBI said, adding there is an imperative need to consider introducing new gold-backed financial products to unlock the hidden economic value in the idle gold in the economy.
RBI pitched for introduction of products like Gold Accumulation Plan, Gold Linked Account, modified Gold Deposit and Gold Pension Product.
The Working Group was formed following announcement for the same in the Monetary Policy Statement 2012-13.
The large rise in the gold loan business, the branch network of gold loan NBFCs, volume of loans disbursed and the quantum of bank borrowings raised certain regulatory concerns.
The RBI said the panel believes that providing real rate of return to investors through alternative instruments holds the key to reducing the excessive demand for gold.
There is also a need to increase monetisation of idle gold stocks in economy for productive purposes. Encouraging loans against the collateral of gold for productive purposes may be a way to do this, the panel observed.
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